Do Money Transfers Affect Credit Score

Do Money Transfers Affect Credit Score

Money transfers are a common part of everyday banking in the UK. Whether you're sending money to a friend, paying rent, or moving funds between your own accounts, it's a routine financial activity. But many people wonder if moving money around can influence their credit score. So, do money transfers affect your credit score?

The short answer is no, ordinary money transfers do not affect your credit score. Transferring money from one bank account to another, or between individuals, has no direct impact on your credit report because it does not involve borrowing or credit agreements.

However, there are some exceptions, particularly when it comes to credit card money transfers, which can influence your credit score in specific ways. This article explains the difference between bank transfers and credit card money transfers, and how your actions may or may not show up on your credit file.

What Is a Money Transfer

There are two types of money transfers to consider:

1. Standard bank-to-bank transfers
This includes moving money between:

• Your own accounts (e.g. from current to savings)

• Two people (e.g. paying a friend via bank transfer or PayPal)

• Paying bills, rent, or services via standing order or Faster Payments

These types of transfers are not forms of borrowing and do not involve credit, so they are not tracked by credit reference agencies and do not appear on your credit report.

2. Credit card money transfers
This is when you use a credit card to send money to a bank account. It is a form of borrowing and works similarly to a cash advance. You’re essentially using your credit limit to access cash, which can then be spent as you wish.

Money transfers from a credit card can affect your credit score and are treated very differently from standard bank transfers.

How Bank Transfers Affect Your Credit Score

Bank transfers between current accounts or savings accounts do not affect your credit score at all. UK credit reference agencies such as Experian, Equifax, and TransUnion do not track balances or activity on current accounts, unless the account includes an overdraft or a formal borrowing arrangement.

So if you:

• Move money between accounts

• Send money to someone else

• Pay for goods or services via bank transfer

Your credit score will remain unchanged.

However, the way you manage your finances behind the scenes can still affect your creditworthiness indirectly. For example:

• Consistently running out of money and dipping into your overdraft may affect your credit if you fail to repay it

• Frequent failed direct debits can indicate financial stress, even if they don't show on your credit file

• Bounced payments or unauthorised overdrafts may be reported by your bank if serious enough

How Credit Card Money Transfers Affect Credit Score

If you use a credit card money transfer to send cash to your bank account, this does affect your credit file. Here's how:

1. It increases your credit utilisation
Using a large portion of your available credit limit raises your credit utilisation ratio, which can lower your credit score. Ideally, you should keep this ratio under 30 percent.

2. It can be viewed as high-risk borrowing
Lenders may view money transfers or cash advances as signs of financial difficulty, especially if used frequently.

3. It adds to your overall debt
The transferred amount becomes part of your outstanding credit card balance. If not repaid promptly, it accrues interest and can harm your score over time.

4. Missed repayments have serious consequences
If you fail to repay your credit card after a money transfer, the missed payment will appear on your credit report and significantly reduce your score.

Real-World Example

Alex transferred £500 from his credit card to his current account to cover emergency expenses. His credit card utilisation jumped from 20 percent to 70 percent. This caused his Experian credit score to dip slightly. He made all payments on time, and his score recovered within a few months.

Meanwhile, Priya regularly transfers money between her current and savings accounts. These transactions have no effect on her credit score, as they do not involve borrowing.

How to Use Money Transfers Wisely

If you’re using credit card money transfers, follow these tips to protect your credit score:

• Only transfer what you can afford to repay

• Use 0 percent promotional offers to avoid high interest charges

• Set up direct debits to make at least the minimum payment

• Avoid using multiple credit cards for transfers at once

• Keep your credit utilisation below 30 percent wherever possible

If you're simply using your current account to send money to friends or pay bills, there's no need to worry about your credit score being affected.

Final Thought

Standard money transfers between bank accounts do not affect your credit score. Credit reference agencies do not track personal bank transfers or current account activity unless it involves borrowing, such as an overdraft.

However, credit card money transfers are a form of borrowing and can impact your credit score through higher utilisation, added debt, and potential missed payments. Used carefully, they can be a flexible way to access funds — but they should be managed with caution.